Your Directors are pleased to present their 30th Annual Report on the affairs of theCompany together with the Audited Statement of Accounts for the year ended 31st March2016.
| ||2015-16 ||2014-15 |
| ||( Rs. in lakhs) ||( Rs. in lakhs) |
|FINANCIAL RESULTS || || |
|Profit before Finance Cost || || |
|Depreciation Tax ||572.11 ||1033.18 |
|Less: Finance Costs ||698.62 ||907.91 |
|Profit/(Loss) before Depreciation ||(126.51) ||125.27 |
|Less: Depreciation ||445.05 ||462.26 |
| ||(571.56) ||(336.99) |
|Less: Provision for Income Tax ||_ ||_ |
|Less: Prior Years Tax Expense (Net) ||0.59 ||_ |
|Add: Deferred Tax Assets ||34.01 ||14.44 |
|Profit/(Loss) for the year ||(538.14) ||(322.55) |
|Balance brought forward from previous year ||1172.54 ||1664.35 |
|Less: Additional Depreciation due to change in life of Assets net of || || |
|Deferred Tax Asset Rs.86.48 Lakhs consequent to enactment of Companies Act 2013 ||_ ||169.26 |
|Balance Carried to Balance Sheet ||634.40 ||1172.54 |
During the year revenue from the operations of the Company is Rs.233.92 Crores ascompared to Rs.280.57 Crores in the previous year. The operating profits of the Company isRs.5.72 Crores as against Rs.10.33 Crores in the previous year. The loss after financecost and depreciation is Rs.5.72 Crores as against the loss of Rs.3.37 Crores in theprevious year.
The Board has decided not to recommend any dividend for the Financial Year 2015-16.
The paid up Equity Share Capital as on 31st March 2016 is Rs.87498650. During theyear under review the Company has not issued any shares with differential rights as todividend voting or otherwise or convertible debentures.
MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY
Due to persistent labour problems the Company has declared Lock out in one of its Millat Kolhapur w.e.f. 2nd May 2016. In another Mill the workers have gone on strike w.e.f.2nd May 2016.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
In accordance with the provisions of Section 134 of the Companies Act 2013 read withthe Companies (Accounts) Rules 2014 required information relating to the Conservation ofEnergy Technology Absorption and Foreign Exchange Earnings and Outgo is given in"Annexure A" to the Directors Report.
In accordance with the provisions of the Companies Act 2013 and the Articles ofAssociation of the Company Shri Narayan Patodia (DIN: 00013122) retires by rotation atthe ensuing Annual General Meeting and being eligible offers himself for re-appointment.Accordingly his re-appointment forms part of the Notice of the ensuing Annual GeneralMeeting. The Company has received declarations from all the Independent Directors of theCompany confirming that they meet the criteria of Independence as prescribed under thesub-section (7) of Section 149 of the Companies Act 2013.
DIRECTORS RESPONSIBILITY STATEMENT
As required by Section 134 (3) (c) of the Companies Act 2013 your Board of Directorshereby state:
(a) that in the preparation of the Annual Accounts for the year ended 31st March 2016the applicable accounting standards have been followed along with proper explanationrelating to material departures if any;
(b) that such accounting policies as mentioned in the Notes to the Financial Statementshave been selected and applied them consistently and judgments and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany as at 31st March 2016 and of the Profit & Loss of the Company for the yearended on that date;
(c) that the Directors have taken proper and sufficient care for maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
(d) that the annual accounts have been prepared on a going concern basis;
(e) that Directors have laid down Internal Financial Controls to be followed by theCompany and such Internal Financial Controls are adequate and operating effectively;
(f) that systems to ensure compliance with the provisions of all applicable laws werein place and were adequate and operating effectively.
Pursuant to the provisions of the Companies Act 2013 the Board has carried out anAnnual Performance evaluation of its own performance the Directors individually as wellas the evaluation of the working of its various Committees.
Pursuant to Regulation 25 (4) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a separate exercise was carried out by IndependentDirectors at their separate meeting to evaluate the performance of individual Directorsincluding the Chairman of the Board who were evaluated on parameters such as level ofengagement and contribution independence of judgement safeguarding the interest of theCompany and its minority shareholders etc.
The performance evaluation of the Independent Directors was carried out by the entireBoard excluding the Directors being evaluated.
During the year four Board Meetings were convened and held the details of which aregiven in the Corporate Governance Report. The intervening gap between the Meetings waswithin the period prescribed under the Companies Act 2013.
POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION
The Companys policy on Directors Appointment and Remuneration includingcriteria for determining qualifications positive attributes independence of a Directorand other matters provided under sub-section(3) of Section 178 is annexed hereto and formsa part of this report.
AUDITORS Statutory Auditors
M/s. Lodha & Co. Chartered Accountants (Firms Reg. No. 301051E) who are theStatutory Auditors of the Company hold office in accordance with the provisions of theCompanies Act 2013 up to the conclusion of the Annual General Meeting of the Companyscheduled to be held in the calendar year 2017 subject to ratification by Members everyyear and are eligible for reappointment.
They have confirmed their eligibility under Section 141 of the Companies Act 2013 andthe Rules framed thereunder for re-appointment as Auditors of the Company. The Boardbased on recommendation of Audit Committee recommends the appointment of M/ s. Lodha& Co. as the Statutory Auditors of the Company.
Necessary Resolution for ratification of appointment of the said Auditors is includedin the Notice of AGM for seeking approval of Members.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board hasappointed M/s. S. K. Jain & Co. Practising Company Secretaries to conductSecretarial Audit of the Company for the Financial year 2015-16.
AUDITORS AND REPORTS
The matters related to Auditors and their Reports are as under:
1. Statutory Auditor and their Report:
At the Annual General Meeting held on 12th September 2015 M/s Lodha & Co.Chartered Accountants were appointed as Statutory Auditors of the Company to hold officetill the conclusion of Annual General Meeting to be held in the calendar year 2017. Interms of the first proviso to Section 139 of the Companies Act 2013 the appointment ofthe Auditors is to be placed for ratification at every Annual General Meeting. Accordinglythe appointment of M/s Lodha & Co. Chartered Accountants as Statutory Auditors ofthe Company is placed for ratification by the Shareholders. In this regard the Company hasreceived a Certificate from the Auditors to the effect that if they are appointed it wouldbe in accordance with the provision of Section 141 of the Companies Act 2013.
The Report given by the Statutory Auditors for the Financial Statements for the yearended 31st March 2016 read with explanatory notes thereon do not call for anyexplanation or comments from the Board under Section 134(3) of the Companies Act 2013.
2. Secretarial Auditor & his Report:
M/s. S. K. Jain & Co. Practicing Company Secretaries was appointed to conductSecretarial Audit of the Company for the financial year 2015-16 as required under Section204 of the Companies Act 2013 and the Rules thereunder. The Secretarial Audit Report forthe financial year 2015-16 forms part of the Annual Report as "Annexure B" tothe Boards Report. The said report does not contain any observation or qualificationrequiring explanation or comments from the Board under Section 134(3) of the CompaniesAct 2013.
The Company has complied with all the mandatory requirements of Corporate Governanceas stipulated in Clause 49 of the Listing Agreement and the Regulation 27 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015. A seperate report onCorporate Governance and a Certificate from M/s. Lodha & Co. Statutory Auditorsregarding compliance with the conditions of Corporate Governance is given in a separatesection and forms part of the Annual Report.
The Board has well-qualified Audit Committee with majority of Independent Directorsincluding Chairman. They possess sound knowledge on Accounts Audit Finance TaxationInternal Controls etc. The details of the Composition of the Audit Committee are given inthe Corporate Governance Report.
The Company Secretary of the Company acts as Secretary of the Committee.
During the year there are no instances where the Board had not accepted therecommendations of the Audit Committee.
NOMINATION & REMUNERATION COMMITTEE & POLICY
The Company has duly constituted Nomination & Remuneration Committee to align withthe requirements prescribed under the provisions of the Companies Act 2013 and therevised Clause 49 of the Listing Agreement and the Reglation 19 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015. The details of the Compositionof the Nomination & Remuneration Committee are given in the Corporate GovernanceReport.
The Board has framed a policy for selection and appointment of Directors SeniorManagement and their
Remuneration. The policy provides for determining qualifications positive attributesand independence of a Director.
The Company has laid down the procedures to inform the Board about the risk assessmentand minimization procedures and the Board has formulated Risk Management policy to ensurethat the Board its Audit Committee and its Executive Management should collectivelyidentify the risks impacting the Companys business and document their process ofrisk identification and risk minimization as a part of a Risk Management policy/strategy.
The common risks inter alia are: Regulations Credit Risk Foreign Exchange andInterest Risk Competition Business Risk Technology Obsolescence Investments Retentionof Talent and Expansion of Facilities etc. Business Risk inter-alia further includesfinancial risk political risk legal risk etc. The Board reviews the risk trendexposure and potential impact analysis and prepares risk mitigation plans if necessary.
Further in accordance with Clause 49 of the Listing Agreement and the Regulation 21 ofthe SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 a RiskManagement Committee has also been formed which also oversees the Risk Management of theCompany.
The details of the Composition of the Risk Mnagement Committee are given in theCorporate Governance Report.
CORPORATE SOCIAL RESPONSIBILITY(CSR)
The Company is not required to contribute towards CSR under Section 135 of theCompanies Act 2013 read with Rules thereunder.
The Board of Directors of your Company however has constituted a CSR Committee. Thedetails of the Composition of the Corporate Social Responsibility Committee are given inthe Corporate Governance Report.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations.
Based on the report of Internal Audit function corrective action are undertaken in therespective areas and thereby strengthen the controls. Significant audit observations andcorrective actions thereon are presented to the Audit Committee of the Board.
During the year under review no material or serious observation has been received fromthe Internal Auditors of the Company for inefficiency or inadequacy of such controls.
VIGIL MECHANISM/WHISTLE BLOWER POLICY
In line with the best Corporate Governance practices Company has put in place a systemthrough which the Directors and Employees may report concerns about unethical behaviouractual or suspected fraud or violation of the Companys Code of Conduct & Ethicswithout fear of reprisal. The Employees and Directors may report to the Compliance Officerand have direct access to the Chairman of the Audit Committee. The Whistle Blower Policyis placed on the website of the Company.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMAN AT WORK PLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has in place an Anti Sexual Harassment Policy in line with the requirementsof the Sexual Harassment of Woman at Workplace (Prevention Prohibition and Redressal)Act 2013. All woman employees (permanent contractual temporary and trainee) are coveredunder this Policy.
The following is a summary of Sexual Harassment complaints received and disposed offduring the year: a) No. of Complaints received: Nil b) No. of Complaints disposed off: Nil
DISCLOSURE UNDER SECTION 197 (12) OF THE COMPANIES ACT 2013
The Company has not employed any individual whose remuneration falls within the purviewof the limits prescribed under the provisions of Section 197 of the Companies Act 2013read with Rule 5(2) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014.
Disclosures pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are given below: a. Ratio of theremuneration of each Director to the median remuneration of the employees of the Companyfor the financial year:
|Name of Director ||Ratio to Median Remuneration |
|Shri K. K. Patodia ||31.88 |
|Shri Narayan Patodia ||15.45 |
|Shri Rajiv Patodia ||15.54 |
b. Percentage increase in remuneration of each Director Chief Executive Officer ChiefFinancial Officer Company Secretary in financial year:
|Name of Person ||Designation ||% increase in remune- ration in financial year |
|Shri K. K. Patodia ||Chairman and MD ||- |
|Shri Narayan Patodia ||Managing Director ||- |
|Shri Rajiv Patodia ||Executive Director and CFO ||- |
|Shri Rahul Rawat ||Company Secretary ||- |
c. Percentage increase in the median remuneration of employees in the financial year:
4.43% d. The number of permanent employees on the rolls of the Company:
1072 employees e. Explanation on the relationship between average increase inremuneration and Company performance:
On an average employees received an annual increase of 5.79%. The individualincrements varied from 1.48% to 30.66% based on individual performance.
The increase in remuneration is in line with market trends. In order to ensure thatremuneration reflects Company performance the performance pay is also linked toorganizational performance apart from individuals performance. f. Comparison ofthe remuneration of the key managerial personnel against the performance of the Company:
|Aggregate remuneration of key managerial personnel (KMP) in FY 2015 - 2016 (Rs. in Lakhs) ||108.89 |
|Revenue (Rs. in Lakhs) ||23392.05 |
|Remuneration of KMPs || |
|(as % of revenue) ||0.47 |
|Profit Before Tax (PBT) (Rs. in Lakhs) ||(571.56) |
|Remuneration of KMPs (as % of PBT) ||- |
g. Variations in the market capitalization of the Company price earnings ratio as atthe closing date of the current financial year and previous financial year:
|Particulars ||As at ||As at ||% |
| ||31/03/2016 ||31/03/2015 ||Change |
|Market Capitalisa- tion (Rs. Lakhs) ||2012.47 ||1723.72 ||16.75 |
|Price Earnings Ratio ||(6.15) ||(3.69) ||66.67 |
h. Percentage increase over decrease in the market quotations of the shares of theCompany in comparison to the rate at which the Company came out with last public offer:
|Particulars ||As at ||As at ||% |
| ||31/03/2016 ||31/03/1993* ||Change |
|Market Price (BSE) ||23.00 ||21.54 ||(6.78) |
|Market Price (NSE) ||23.00 ||21.54 ||(6.78) |
* Adjusted for rights issue of 2019815 shares of face value Rs. 10 issued at Rs.60 in the financial year 1992-1993.
i. Average percentile increase already made in the salaries of employees other than themanagerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:
The average annual increase was around 5.79%. However during the course of theyear the total increase is approximately 1.55% after accounting for promotionsand other event based compensation revisions.
Increase in the managerial remuneration for the year was NIL.
j. Comparison of each remuneration of the key managerial personnel against theperformance of the Company:
|Name of Person Designation ||Shri K. K. Patodia Chairman and MD ||Shri Narayan Patodia Managing Director ||Shri Rajiv Patodia Executive Director & CFO ||Shri Rahul Rawat Company Secretary |
|Remunera- tion in FY 2015-2016 (Rs. in Lakhs) ||51.72 ||25.06 ||25.20 ||6.91 |
|Revenue (Rs. in Lakhs) ||23392.05 ||23392.05 || |
|Remunera- tion as % of revenue ||0.22 ||0.11 ||0.11 ||0.03 |
|Profit Before Tax (PBT) (Rs. in Lakhs) ||(571.56) ||(571.56) ||(571.56) ||(571.56) |
|Remunera- tion as % of PBT ||- ||- ||- ||- |
k. The key parameters for any variable component of remuneration availed by theDirectors:
None l. The ratio of the remuneration of the highest paid Director to that of theemployees who are not Directors but receive remuneration in excess of the highest paidDirector during the year:
None m. Affirmation that the remuneration is as per the remuneration policy of theCompany:
The Company affirms remuneration is as per the remuneration policy of the Company.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
During the year under review the Company has not given any loans and guarantees.Details of Investments covered under the provisions of Section 186 of the Companies Act2013 are given in the notes to the Financial Statements.
RELATED PARTY TRANSACTIONS
All Related Party Transactions that were entered into during the Financial year were onan arms length basis and were in the ordinary course of business. There are nomaterially significant Related Party Transactions made by the Company with PromotersDirectors Key Managerial Personnel or other designated persons which may have a potentialconflict with the interest of the Company at large and hence enclosing of Form AOC-2 isnot required. All Related Party Transactions are placed before the Audit Committee as wellas the Board for approval. Prior omnibus approval of the Audit Committee is obtained forthe transactions which are of a foreseen and repetitive nature. The transactions enteredinto pursuant to the omnibus approval so granted are audited and a statement givingdetails of all Related Party Transactions is placed before the Audit Committee and theBoard of Directors for their approval on a quarterly basis. The Company has developed aRelated Pa r ty Transactions Policy for the purpose of identification and monitoring ofsuch transactions policy for the purpose of identification and monitoring of suchtransactions.
The policy on Related Party Transactions as approved by the Board is available on theCompanys website at www.eurotexgroup.com.
MANAGEMENT DISCUSSION AND ANALYSIS
Pursuant to Clause 49 of the Listing Agreement and the Regulation 34 (2) (e) along withother requirements as specified in Schedule V (B) of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Management Discussion & AnalysisReport for the year under review is given under a separate section and forms part of theAnnual Report.
The Company has not accepted or renewed any amount falling within the purview ofprovisions of Section 73 of the Companies Act 2013 read with the Companies (Acceptance ofDeposit) Rules 2014 during the year under review. Hence the requirement for furnishingof details of deposits which are not in compliance with the Chapter V of the Act is notapplicable.
EXTRACT OF ANNUAL RETURN
Pursuant to the provisions of Section 134 (3) (a) of the Companies Act 2013 Extractof the Annual Return for the financial year ended 31st March 2016 made under theprovisions of Section 92 (3) of the Companies Act 2013 in Form MGT - 9 is annexedherewith as "Annexure C".
Your Directors wish to place on record their appreciation and thankful acknowledgementfor valuable assistance the Company received from all Lending Bankers.
| ||On behalf of the Board |
|Place : Mumbai ||K. K. PATODIA |
|Date : 21st May 2016 ||Chairman and Managing Director |